In World War II, he served with the Office of Strategic Services and in 1943 he was commissioned as a lieutenant in the U.S. Army, working various military intelligence assignments throughout the war. In 1945 after several wartime promotions, he was transferred to Headquarters Air Forces Western Pacific as a major, where he became chief of the Intelligence Division.

Lansdale extended his tour to remain in the Philippines until 1948, helping the Philippine Army rebuild its intelligence services and resolve the cases of large numbers of prisoners of war. These activities were also used to camouflage his involvement in the discovery and the disbursement of the immense hidden gold hoard amassed by the Japanese during their occupation. These funds were disbursed to numerous banks worldwide, and later used to finance CIA covert activities.[2] Lansdale was commissioned as a captain in the United States Air Force in 1947, with the temporary rank of major. After leaving the Philippines in 1948, he served as an instructor at the Strategic Intelligence School, Lowry Air Force Base, Colorado, where he received a temporary promotion to lieutenant colonel in 1949. In 1950, President Elpidio Quirino personally requested that Lansdale be transferred to the Joint United States Military Assistance Group, Philippines, to assist the intelligence services of the Armed Forces of the Philippines combat the Communist Hukbalahap. Ramon Magsaysay had just been appointed secretary of national defense and Lansdale was made liaison officer to him. The two men became close friends, frequently visiting the combat areas together. With Lansdale's help, Magsaysay eventually became President of the Philippines on December 30, 1953.[3] Lansdale helped the Philippine Armed Forces develop psychological operations, civic actions, and the rehabilitation of Hukbalahap prisoners in projects such as EDCOR. He was temporarily promoted to colonel in 1951.[4]

Lansdale was a member of General John W. O'Daniel's mission to Indo-China in 1953, acting as an advisor on special counter-guerrilla operations to French forces against the Viet Minh. From 1954-57 he was stationed in Saigon as the head of the Saigon Military Mission (SMM). During this period he was active in the training of the Vietnamese National Army (VNA), organizing the Caodaist militias under Trình Minh Thế in an attempt to bolster the VNA, a propaganda campaign encouraging Vietnam's Catholics to move to the south as part of Operation Passage to Freedom, and spreading claims that North Vietnamese agents were making attacks in South Vietnam. Before the widely discredited 1955 referendum that saw Prime Minister Ngô Đình Diệm depose head of state Bảo Đại and proclaim himself President of the newly formed Republic of Vietnam, Lansdale advised Diệm, with whom had a close friendship, to not rig the poll and to be content with a realistic 60-70% result, advice Diệm did not take. Diệm was credited with 98.2% of the vote overall and 133% in Saigon.

From 1957 to 1963 Lansdale worked for the Department of Defense in Washington, serving as Deputy Assistant Secretary for Special Operations, Staff Member of the President's Committee on Military Assistance, and Assistant Secretary of Defense for Special Operations. During the early 1960s he was chiefly involved in clandestine efforts to topple the government of Cuba, including proposals to assassinate Fidel Castro. Much of this work was under the aegis of "Operation Mongoose" which was the operational name for the CIA plan to topple Castro's government. According to Daniel Ellsberg, who was at one time a subordinate to Lansdale, Lansdale claimed that he was fired by President Kennedy's Defense Secretary Robert McNamara after he declined Kennedy's offer to play a role in the overthrow of the Diem regime.

He retired from the Air Force on November 1, 1963. Yet from 1965 to 1968 he was back in Vietnam where he worked in the United States Embassy, Saigon, with the rank of minister. The scope of his delegated authority was vague, however, and he was bureaucratically marginalized and frustrated. His 1972 memoir, In the Midst of Wars. An American's Mission to Southeast Asia, covers his time in the Philippines and Vietnam up to December, 1956.[6]

His biography, The Unquiet American, was written by Cecil Currey and published in 1988; the title refers to the common, but incorrect belief, that the eponymous character in Graham Greene's novel The Quiet American was based on Lansdale. According to Norman Sherry's authorized biography of Greene The Life of Graham Greene (Penguin, 2004), Lansdale did not officially enter the Vietnam arena until 1954, while Greene wrote his book in 1952 after departing Vietnam. More likely is that he was the inspiration for the character Colonel Hillandale in Eugene Burdick's and William Lederer's joint novel The Ugly American published in 1958. Many of Lansdale's private papers and effects were destroyed in a fire at his McLean home in 1972. In 1981, Lansdale donated most of his remaining papers to Stanford University's Hoover Institution.[citation needed]